The Romanian IFRS Institute is a resource dedicated to the implementation process of IFRS, providing useful information about the global financial reporting framework for CFOs, members of the Board, leaders and shareholders of companies.

Details

Golf Tourism: New Opportunity for Romania? But how much does it cost to build an 18 Hole Golf course?

26 May 2014, Bucharest

The approximately 500 affiliated players in Romania have only five courses in the country for this emerging sport, out of 200 golf courses available in 2013 in Central and Eastern Europe. The Czech Republic is the most mature golf market in Eastern Europe. KPMG has identified some 20 new course openings in this country since 2008. The 55.000 affiliated players in the Czech Republic have, at their disposal, 96 locations for this sport.

Why do we need more courses?

Richard Perrin, Partner Advisory, KPMG Romania, said: “Because, due to the lack of facilities, the number of registered players in the Romanian Golf Association is not a true reflection of the market’s potential. When we look at our neighbouring countries, Romania is close to bottom of the league table in terms of golf courses. We are, of course, a long way behind the Czech Republic with its 96 courses, but we also do badly compared with Poland, which has 27 courses and 3,000 affiliated players, Hungary, which has 15 courses and 1,400 players, and Bulgaria, which has seven golf courses and 640 players.”

Attracting high quality tourism

The World Trade Organization predicts that by the year 2020 nearly one in three visitors to Europe will choose a CEE destination and golf tourists are always looking for new places to visit. According to Economic Research Associates, a London based tourism advisory firm, the types of tourist most attracted to golf are also keen on combining sport with culture and heritage, which Romania has in abundance, and which is still largely undiscovered.

A far as golf tourism is concerned, Europe’s most visited destinations continue to be Spain and Portugal, followed by Scotland and Turkey. Other increasingly popular locations include Italy and Bulgaria, the new emerging golf tourism hot spots of Europe.

Developing high quality residential projects

Although the residential golf community concept has a much shorter history in EMA than in North America, it is widely recognized that – when properly planned – the location of houses alongside golf courses can help developers to increase sales and add a sale premium to real estate prices. Numerous studies have indicated that golf courses come second only to a waterfront as the most desirable location for a housing community. However, the added value which golf offers, as part of a real estate or tourist complex, is not only because of the facility itself. It mostly derives from the beautiful, calm scenery and landscape a golf course provides.

Richard Perrin adds: “In KPMG’s latest study Golf Course Development Cost Survey 2014 in Europe, the Middle East and Africa, all respondents achieved a premium on the sale price of associated real estate units. Close to half the respondents with an integrated real estate development estimated this premium to be more than 20% in comparison to the sale price of a similar real estate unit in the neighbourhood but without the golf course connection. In addition to the expected profitability associated with sales of real estate units, over two thirds of respondents expected the golf course to provide a satisfactory return on investment in its own right as well.”

But how much does it cost?

According to the same KPMG study, assuming that the investor can obtain the land on concession, it could cost around 12 M euros to develop a high quality 18-holes golf course, including a conference facility, restaurant and bars, 12 chalets, spa and recreational activities. Over the period 2008-2013 the average development cost for a golf hole in Eastern Europe, based on courses of all sizes, was 367,000 euros; three times higher than the cost for 2004-2008 of 106,000 euros. The main reason is that recent developments in the region have typically been of higher quality. In comparison, the average development cost in Western Europe and south east Mediterranean Europe (France, Italy, Portugal, Spain, Cyprus) is 450,000 euros and in EMA it is 328,000.

The new trend: organising golf event for clients and partners

KPMG in Romania is organising its first golf tournament in Bulgaria at Balchik, with its Partners Ferrari, Mondial Voyages GSA Club Med, Air France, Comptesse du Barry, La Cave d'Olivier FUCHS, Istyle and Marsh. Many members of the business community will attend this event.

KPMG’s Golf Advisory practice has provided professional services to developers of new golf courses and integrated real estate projects. Additionally we have assisted several tourism institutions with the creation of golf development strategies and helped managers of existing golf courses to become operationally more efficient. We hope to have the opportunity soon to announce the opening of the first 18 hole golf course recognised by the professional federation in Romania.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.